Initiation of Countervailing Duty Investigations: Certain Carbon Steel Butt-Weld Pipe Fittings From India and Israel

DEPARTMENT OF COMMERCE

[C-533-812, C-508-808]

Initiation of Countervailing Duty Investigations: Certain Carbon

Steel Butt-Weld Pipe Fittings From India and Israel

AGENCY: Import Administration, International Trade Administration,

Commerce.

EFFECTIVE DATE: March 25, 1994.

FOR FURTHER INFORMATION CONTACT: Julie Anne Osgood (India) or Elizabeth

Graham (Israel), Office of Countervailing Investigations, Import

Administration, U.S. Department of Commerce, Washington, DC 20230;

telephone (202) 482-0167 and 482-4105.

The Petition

On February 28, 1994, we received petitions in proper form filed by

the U.S. Fittings Group on behalf of the United States carbon steel

butt-weld pipe fittings (``pipe fittings'') industry. In accordance

with 19 CFR 355.12, petitioner alleges that manufacturers, producers,

or exporters of the subject merchandise in India and Israel receive

subsidies within the meaning of section 701 of the Tariff Act of 1930,

as amended (``the Act'').

Injury Test

India and Israel are each a ``country under the Agreement'' within

the meaning of section 701(b) of the Act. Therefore, Title VII of the

Act applies to these investigations. Accordingly, the U.S.

International Trade Commission (``ITC'') must determine whether imports

of the subject merchandise from India and Israel materially injure, or

threaten material injury to, a U.S. industry.

Standing

Petitioner has stated that it is an interested party, as defined in

section 771(9)(E) of the Act, and that it has filed the petitions on

behalf of the U.S. industry producing the merchandise subject to these

investigations. If any interested party, as described under paragraphs

(C), (D), (E), or (F) of section 771(9) of the Act, wishes to register

support for, or opposition to, this petition, such party should file a

written notification with the Assistant Secretary for Import

Administration, in accordance with 19 CFR 355.31.

Scope of Investigation

The products covered by these investigations are certain carbon

steel butt-weld pipe fittings having an inside diameter of less than

fourteen inches (355 millimeters), imported in either finished or

unfinished condition. Pipe fittings are forged steel products used to

join pipe sections in piping systems where conditions require

permanent, welded connections, as distinguished from fittings based on

other methods of fastening (e.g., threaded, grooved, or bolted

fittings). Pipe fittings come in several basic shapes: ``elbows'',

``tees'', ``caps'', and ``reducers.'' The edges of finished pipe

fittings are beveled, so that when a fitting is placed against the end

of a pipe (the ends of which have also been beveled), a shallow channel

is created to accommodate the ``bead'' of the weld which joins the

fitting to the pipe. These pipe fittings are currently classifiable

under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the

United States (``HTSUS''). Although the HTSUS subheading is provided

for convenience and customs purposes, our written description of the

scope of these proceedings is dispositive.

Initiation of Investigations

The Department has examined the petitions on pipe fittings from

India and Israel and found that they comply with the requirements of

section 702(b) of the Act and 19 CFR 355.12. Therefore, in accordance

with section 702(c) of the Act and 19 CFR 355.13 (a) and (b), we are

initiating countervailing duty investigations to determine whether

manufacturers, producers or exporters of pipe fittings in India and

Israel receive countervailable subsidies. The following programs are

included in our investigations.

India

1. Rebates Under the International Price Reimbursement Scheme

2. Pre-Shipment Export Loans

3. Post-Shipment Export Loans

4. Advances Licenses

5. Use and Sale of Additional Licenses

6. Sale of Replenishment Licenses

7. Income Tax Deductions Under Section 80HHC

8. Market Development Assistant Grants

9. Export-Promotion, Capital Goods Scheme

10. Benefits for 100 Percent Export-Oriented Units

11. Benefits Provided by Export-Processing Zones

We are not including the following programs which are alleged to be

benefitting producers of the subject merchandise in India. (For a more

detailed discussion, see the Memorandum to Barbara R. Stafford from

Team dated March 21, 1994, on file in the Central Records Unit of the

Main Commerce Building.)

1. Regional Incentives

Petitioner alleges that new projects and industries in ``backward''

states may be eligible for subsidies from the Government of India

(``GOI'') or the state government. According to petitioner, the

subsidies include federal and state tax benefits and fixed-capital

investment subsidies. However, petitioner has not provided any

information that the producers of pipe fittings are located in these

``backward'' states.

Rebates Under the Cash Compensatory Support Program

The Cash Compensatory Support Program (``CCS'') was established in

1966 by the GOI to rebate indirect taxes on exported merchandise.

Petitioner argues that although the GOI suspended the program effective

July 3, 1991, producers/exporters of pipe fittings may be receiving

residual benefits.

We verified in the 1990 Administrative Review of the Countervailing

Duty Order on Certain Iron-Metal Castings from India that the GOI

terminated cash rebates on exports made after July 2, 1991 (see the

December 13, 1993 government verification report on file in Room B-099

of the Main Commerce Building).

Because we consider the countervailable benefit from this program

to occur at the time the benefit is earned, i.e., at the time of

export, and not when a company applies for or receives the benefit (see

section 355.48(b)(7) of the Department's proposed regulations in

Countervailing Duties; notice of proposed rulemaking and Request for

Public Comments, 54 FR 23366 (May 31, 1989); and Final Affirmative

Countervailing Duty Determination: Steel Wire Rope from India, 56 FR

46292, 46294 (September 11, 1991)), the producers of pipe fittings

could not have benefitted from this program during the period of

investigation.

3. Reduced Freight Rates

Petitioner alleges that the cost of delivery for steel is reduced

for customers located in remote areas of India. However, petitioner has

not provided sufficient information concerning the nature of this

program or information indicating that the producers of pipe fittings

are located in ``remote areas.''

Israel

1. Grants under the Encouragement of Capital Investments Law of 1959

(``ECIL'')

2. Other Benefits Under ECIL

a. Section 42--Preferential Accelerated Depreciation

b. Section 46--Tax Benefits

c. Section 24--Preferential Loans

d. Interest Subsidy Payments

3. Long-Term Industrial Development Loans

4. Exchange Rate Risk Insurance Scheme

5. Labor Training Grants

6. Industrial Research and Development Grants

7. Special Export Financing Loans

8. Export Incentives

a. Exception from wharfage fee and indirect taxes

b. Provision of funds for transportation of goods to Eilat Harbor

We are not including the following programs which are alleged to be

benefitting producers of the subject merchandise in Israel. (For a more

detailed discussion, see the Memorandum to Barbara R. Stafford from

Team dated March 14, 1994, on file in the Central Records Unit of the

Main Commerce Building.)

1. Partial Tax Exemption Under ECIL

Petitioner alleged that manufacturers of pipe fittings may have

received partial tax exemptions under ECIL. However, this program was

determined in a previous case to be terminated. See Final Affirmative

Countervailing Duty Determination of Oil Country Tubular Goods from

Israel, 52 FR 1649 (January 15, 1987). Petitioner provided no new

information to indicate that residual benefits are being received or

that the program has been re-enacted.

2. Equity Maintenance Allowances

Petitioner alleged that manufacturers of pipe fittings may have

received benefits under this program. However, petitioner does not

describe the nature of the benefits provided under this program, nor

indicate why it believes that manufacturers of pipe fittings may have

benefitted from the program.

ITC Notification

Pursuant to Section 702(d) of the Act, we have notified the ITC of

these initiations.

Preliminary Determinations by the ITC

The ITC will determine by April 14, 1994, whether there is a

reasonable indication that a United States industry is being materially

injured, or threatened with material injury, by reason of imports from

India and Israel. Any ITC determination which is negative will result

in the respective investigation being terminated; otherwise, the

investigations will proceed according to statutory and regulatory time

limits.

This notice is published pursuant to 702(c)(2) of the Act and 19

CFR 355.13(b).

Dated: March 21, 1994.

Paul L. Joffe,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-7124 Filed 3-24-94; 8:45 am]

BILLING CODE 3510-DS-P